ungku aziz centre for development studies, university of
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Ungku Aziz Centre for Development Studies, Universiti MalayaUngku Aziz Brown Bag Webinar Series 2020
8th October 2020
Social Entrepreneurship in Malaysia
Baskaran AngathevarAssociate Professor, Department of Development Studies,
Faculty of Economics and Administration, University of Malaya, Kuala Lumpur, Malaysia.
Context
• The Malaysian Global Innovation & Creativity Centre (MaGIC) came up with a blueprint fordeveloping the social enterprise sector in 2015. Until recently, there was no formalrecognition of this sector. Only in 2019 Ministry of Entrepreneurship Development initiatedSocial Enterprise Accreditation (SE.A), a national certification recognising legitimate socialenterprises (22 SEs received SE.A in Jan 2020).
However, still there is no comprehensive mapping of social entrepreneurshipecosystem in Malaysia, although there was an initial effort led by British Council andMinistry of Entrepreneurship development and UN ESCAP in 2018 involving 132respondents, some in depth interviews, and round table of stakeholders.
There is no serious research on measuring the impact of social entrepreneurship ondevelopment (Malaysia)
Also there is no source of information from where researchers can access quantitativeand qualitative data on the social enterprises in Malaysia
• This research attempts to address some of these deficits of knowledge in this sector.
Research Questions
• 1. What are the attributes (features) and role of business incubators and intermediariesoperating in the social enterprise sector in Malaysia?
• 2. How do the key domains of entrepreneurship ecosystem (market, finance, human capital,culture, support, policy) shape the social entrepreneurship in Malaysia?
• 3. What are the factors contributing to sustainability of social enterprises in Malaysia?
• 4. What are the major challenges faced by the social enterprises in Malaysia?
Definitions
• “Intermediaries” mean both business incubators (BIs) and other intermediaries (IMs)who are involved directly in fostering social entrepreneurship.
• As there was no legal recognition of social enterprise in Malaysia until early 2020, thisstudy adopted a modified definition as used by UK Government to consider an entityas a social enterprise:
• “A social enterprise is a business [or organization] with primarily social objectives[which is run on business principles to generate revenues and surpluses], whosesurpluses are principally reinvested for that purpose in the business or in thecommunity, rather than being driven by the need to maximise profit for shareholdersand owners” (DTI, 2004).
Definition ofSocial Enterprise (SE) in Malaysia
Business entity that is registered under any written law in Malaysia that proactively creates positive social or environmental impact in a way that is financially sustainable.
-- Ministry of Entrepreneur Development (2019), SOCIAL ENTERPRISE ACCREDITATION (SE.A) GUIDELINES
What is Social Entrepreneurship?
• Social Entrepreneurs are change agents in the social sector; creating systemic changes and sustainable improvements in education, health care, economic development, the environment, the arts, or any other social field (Dees, 2001)
• Social enterprise refers to non-profit organizations that operate businesses both to raise revenue and to further enhance the social missions of their organisations(Zainon et al., 2014).
Difference between Social enterprise & Commercial enterprise
• Social entrepreneurship is about finding new and better ways to create andsustain social value (Anderson and Dees, 2002).
• For-profit corporations usually have a clear goal of maximizing valueappropriation and satisfying value creation by following legal requirementsand socially responsible actions, opposed to Social-mission organizations,who maximizes on value creation and satisfaction on value appropriationjust to be sustainable and able to re-invest in growth (Santos, 2012).
• As such, what determines the difference of a social enterprise andcommercial enterprise is on whether the organization prioritizes valuecreation against value appropriation.
Creating Social Value with Social Entrepreneurship
• The term “social entrepreneurship” (SE) is used to refer to the rapidly growing number oforganizations that have created models for efficiently catering to basic human needs thatexisting markets and institutions have failed to satisfy (Seelos & Mair, 2005).
• It is argued therefore that this secor can have profound implications in the economicsystem: creating new industries, validating new business models, and allocating resourcesto neglected societal problems (Santos, 2012).
• Contrary to business entrepreneurs, social entrepreneurs have a "double bottom line" inwhich social value appears next to financial value (Acs et al., 2013; Lumpkin et al., 2013).
• Increasingly a triple bottom line approach is followed by social entries since it embraceseconomic, social and environmental perspectives.
Social Entrepreneurship Ecosystem
External Environment
Government Agencies, Intermediaries, Corporations, Government Policies &
Programmes, Financial Institutions, Investment and others
Major Contributing
Factors & Challenges
to Sustainability
Key Ecosystem
Domains
1. Market
2. Finance
3. Human Capital
4. Culture
5. Support
6. Policy
Social Enterprise
(Major Characteristics)
Founder/ Entrepreneur
Background
Experience
Social enterprise
Classification
(Alter, 2007)
Sustainability
Business Opreations
& Social Impact Programmes
Methodology and Data
• Since there is very little research on social entrepreneurship in Malaysia, this study is anexploratory research, and uses mainly qualitative approach.
• Data gathered from different sources: managers of incubators and intermediaries, socialenterprises, and secondary documents.
• Data were gathered through semi-structured interviews of 6 intermediaries (MAGIC,Tandemic, MyHarapan, Air Asia Foundation, PACOS Trust and Yayasan Sabah), but usedonly the first four cases for analysis as PACOS Trust is also a social enterprise and Yayasan isa state level public organization promoting entrepreneurship in general.
• We have interviewed 20 Social enterprises (from 4 clusters: Klang valley, Penang, Sabah,and Sarawak).
Role of SE Intermediaries/ Business Incubators
Governance of SEs: Diverse origins and Weak Management
• The organizations involved in fostering and supporting social enterprises canbe categorized as business incubators, accelerators, and otherintermediaries.
• Tandemic and PACOS trust can be described as incubators. MaGIC andYayasan Sabah (both government organizations) act more like accelerators.Air Asia Foundation and MyHarapan falls in the category of intermediaries.
• What is interesting is that Tandemic, PACOS Trust and MyHarapanthemselves function like social enterprises.
• All BIs and MIs provide various training activities and run workshop forpotential and existing SEs. They also provide some market intelligence, butit appears to be not treated as central or core service.
• They also provide different levels of mentoring (mostly post selection) andmonitoring support.
• However, these activities do not appear to be well organized orimplemented.
• Similarly, there is little performance measurement system in place, exceptin the case of AAF.
• The BIs and IMs operating in the social enterprise sector in Malaysia are a mix of public andprivate funded actors.
• For example, MaGIC is wholly funded by the government, while MyHarapan exists onpartial government funding. The others are largely privately funded.
• Because MaGIC is heavily funded by the government, it is understandable that it has verystrong links with various ministries and departments and national agencies.
• This has led to MaGIC establishing a predominant presence in the sector. As a result itappears that some other IMs who were emerging as strong actors in the SE sector such asTandemic and Scope either have to re-orientate their core focus or scale back their rangeof programmes and activities.
Table 2: Selection Criteria for and Services Provided to Social Entrepreneurs by the Case BIs and IMs
Criteria/
Service
Tandemic MaGIC AA Foundation MyHarapan
Selection
Process
Open to public 1. Must have a prototype
to be selected into the
accelerator programme.
2. Internal screening on
eligibility
3. Leverage on the
contacts provided by
AIM, State
Governments
Four main criteria:
Social impact;
Beneficiaries;
Sustainability;
Innovativeness
Additional criteria:
located close to AA
destination, Non-
financial needs,
concrete timeline and
budget, Attitude and
sincerity of founder(s),
2 year track record
1. 16 – 30. Youths.
2. Entrepreneurs,
(future or aspiring or
already
entrepreneurs)
3. Main skills
Table 2: Selection Criteria for and Services Provided to Social Entrepreneurs by the Case BIs and IMs
Criteria/ Service Tandemic MaGIC AA Foundation MyHarapan
Funding Currently limited funding
of SE incubation using
revenues generated from
other activities
It started Tandem fund to
fund SEs, but discovered
there were not many
organizations that could
be viable for investment.
So, it shifted focus
promoting Social
Innovation instead.
Yes.
(a) RM30k to 25 SEs that have
undergone the accelerator
programme.
Funds are retractable if they do
not meet the milestones set for
the year. MaGIC will monitor them
during the 12 month period.
(b) RM150k from the Amplify
Awards Programme for a SE that
shows high promise and potential
Yes.
It follows the budget
presented by SE. Their
targets will be monitored
within the year.
If targets are not achieved,
reasons for not achieving
will be looked into.
A site visit will be conducted
before and during funding
period.
Funded 10 SEs, including 2 in
Malaysia: Tonibung and APE
Malaysia
Yes
(a) SEV – Social Enterprise
Venture Fund for startups
(b) Youth Action Grants –
prototype/seed funding
Criteria/ Service Tandemic MaGIC AA Foundation MyHarapan
Market
Intelligence
Provide consultation to
SE that would want
Tandemic’s service that
may include market
intelligence.
Classes by industry practitioners
on specific knowledge i.e.
Legalities and risk management,
branding, product development
and so on.
Provides through AirAsia’s
network and partners (e.g.
PWC and Designers)
Provides Training
Workshops.
Mentoring No pre or post selection
mentoring for SEs.
Mentoring (External) /
Consulting
1. “Saurah industries”,
the water filtration.
2. Simply cookies
Mentoring is only provided post
selection once these SE enter
into the SE Accelerator
programme.
Mentoring on budgeting
and targets assessment
Guidance through local
organisations /NGO (e.g.
Change Fusion in Thailand)
Accelerator/Incubator
(pre & post selection)
Monitoring: ranges from
3 months to 1 year or
more.
Consultation offered to
any entrepreneur, even
someone who is just at
‘idea’ stage.
Criteria/ Service Tandemic MaGIC AA Foundation MyHarapan
Monitoring No monitoring. Internal
projects are usually
handed off after
incubation is completed
where it could be
sustainable on its own.
For 12 months, in which they will
be given RM30,000 to achieve
certain milestones where it can
be retracted if milestones are not
achieved.
After six months visit; after
12 months re-evaluation.
If SE applies for something
new to expand the project,
we will make another visit.
Monitoring depends on
the type of the SE.
Assessing
Outcome of SE
Programme
1. Measures differently
according to different
projects
2. Milestone based, not
based on incubation
period.
1. Target for at least 5 (out of 25)
social enterprises to continue
operating and breakeven in the
next 12 months after the
programme
There is no specific
programme for SEs.
Financial support given to
SE will be monitored to
ensure governance and
efficiency through the final
report.
Generating an idea,
initiative and plan to be
presented to the ETP
Workshop
Table 3: Various Projects and Activities by the Case BIs & IMs supporting Social Entrepreneurship
Tandemic MaGIC AA Foundation MyHarapan
Provides mentoring to external Social
Enterprise on a walk-in basis.
Main Activities:
1. Training2. Consultancy3. Incubation (internal)
Incubation Projects:
(a) Do Something Good (Largest Volunteering Platform) - internal
(b) Collective Impact (on education) -internal
(c) Diabetes Prevention programme (for Nova Nordisk and MOH)
(d) Human Trafficking project with TelcosInternal
(e) Hati.my –Database of Social Enterprises (completed).
Specific Projects:
1. Make Weekends2. Bridging Workshops
1. Accelerate existing SEs through Accelerator programme and Amplify Awards programme.
2. Creating Awareness and movement on
Social Enterprise in the country
3. Build the Malaysian SE ecosystem by
developing:
(a) Financial capital
(b) Human capital
(c) Procurement
4. Developing policies and framework
changes that is friendlier to social
enterprises including incentive and legal
structure
Specific Projects:
1. Accelerator Programme (4 months) –
prototype needed with monitoring after
programme. 2 rounds each year
1. Mentorship2. Classes3. Events4. Network5. Funds RM30k (w/o equity)Monitor for 12 months.
2. Amplify Awards
To bring about awareness of social
entrepreneurship within ASEAN countries
and to help develop social enterprises
based on highly stringent criteria to ensure
their success.
Main Activities:
1. Funding2. Workshops3. Mentoring4. Facilitating market space and forum
for social enterprises
Specific Projects:
Annual Destination: GOOD events
throughout ASEAN to facilitate market
space and forum for SEs
1. Youth Engagement Work for Capacity Development through:• Workshops• Bootcamps• Roadshows• Ad-hoc mentoring and coaching
Social Entrepreneurship bootcamp (yearly) Workshop (Or by demand from specific institutions)
(a) Project Management
(b) Coaching and Mentoring
(c) Roadshows, Competitions/Events
2. Impact Evaluation on social initiatives for the corporate sector
Specific Projects:
1. Social Business Challenge Competition and Forums
2. Workshops3. Nationwide Roadshows
Major Characteristics of Social Enterprises
Sample SEs: Profiles of Founders No Social
Enterprise
Location Est.
Year
Founder
Age
Founder
Qualification
Professional
Background
1 100% Projects
(Sdn Bhd)
Klang
Valley
2015 >30 Law, IT,
Psychology
IT, Consultant,
Banker,
Educationist
2 ANB Agro Trainer
(Sdn Bhd)
Penang 2012 >30 Master IT Manufacturing &
Education
3 APE Malaysia
(Sdn Bhd)
Klang
Valley
2007 >30 N/A Conservationist
& Environmental
lobbyists
4 Arus Academy
(Sdn Bhd)
Penang 2015 <30 Actuarial Science,
IT, Psychology &
Engineering
Fresh graduate
5 Backyard Tours
(Sdn Bhd)
Sarawak 2015 <30 Bachelor- TESOL
& IT
Fresh graduate
6 Batik Boutique
(Sdn Bhd)
Klang
Valley
2013 >30 MBA,
Engineering,
Communication
Tourism,
Manufacturing &
Consultancy
7 BCI (Sdn Bhd) Sabah 2011 >30 PhD NGO
8 Biji-Biji (Sdn Bhd) Klang
Valley
2013 <30 International
Development,
Accounting,
Engineering,
Communications
Fresh graduates
9 Rapidea (Sdn Bhd) Sabah 2011 >30 Logistic NGO
10 Build for
Tomorrow (Sdn
Bhd)
Klang
Valley
2014 >30 Business
Development
NGO &
Corporate
11 DIBS Coffee (Sdn
Bhd)
Klang
Valley
2013 >30 N/A Business
consultant
12 Heart Treasures
(Sdn Bhd)
Sarawak 2012 >30 Accounting Corporate,
Accountant,
Craft Artisan
13 Leaderonomics
(Sdn Bhd)
Klang
Valley
2008 >30 Accounting,
Finance &
Economics
Corporate,
banking &
entrepreneurial
14 Loo Urban
Farming
(Enterprise)
Penang 2015 >30 IT IT
15 PACOS (Trust) Sabah 1983 >30 Post-Graduate
Degree
Started PACOS
as fresh
graduates
16 SAWO (Society) Sabah 1985 >30 MA-Gender &
Development
Civil Service
17 Tanoti (Sdn Bhd) Sarawak 2012 >30 PhD in Textile Corporate banker
18 Tonibung (Sdn
Bhd)
Sabah 2009 <30 Bachelor
Engineering
Fresh graduate
19 Worming UP (Sdn
Bhd)
Sarawak 2015 <30 Bachelor
Biotechnology
Fresh graduate
20 WWF (Sdn Bhd) Sabah N/A <30 Bachelor Degree NGO
Profile & Typology of Sample Social Enterprises
Social Value Created by Social Enterprises in MalaysiaNo Social Enterprise Social Value Created
1 100% Projects (Sdn Bhd) Supporting public school teachers and students with teaching and learning
materials
2 ANB Agro Trainer (Sdn Bhd) Creating jobs and income for rural under-privileged women
3 APE Malaysia (Sdn Bhd) Eco-Tourism / Wildlife protection
4 Arus Academy (Sdn Bhd) Supporting / Tutoring public school students
5 Backyard Tours (Sdn Bhd) Eco-Tourism/ Creating job and income for rural community
6 Batik Boutique (Sdn Bhd) Creating jobs and income for rural under-privileged women
7 BCI (Sdn Bhd) Supporting under-served communities
8 Biji-Biji (Sdn Bhd) Urban environmental conservation/ creating jobs for disadvantaged sections
9 Rapidea (Sdn Bhd) Supporting Under-served communities
10 Build for Tomorrow (Sdn Bhd) Environmental conservation/ creating employment
11 DIBS Coffee (Sdn Bhd) Providing employment for young people with hearing impairment
12 Heart Treasures (Sdn Bhd) Training mentally challenged young people
13 Leaderonomics (Sdn Bhd) Developing human capital (supporting young people)
14 Loo Urban Farming (Enterprise) Urban environmental conservation
15 PACOS (Trust) Creating jobs for remote rural communities, training nursery teachers,
organic farming skills, supporting agro /handicraft product development
16 SAWO (Society) Supporting women (victims of abuse) both in rural and urban areas
17 Tanoti (Sdn Bhd) Cultural heritage preservation/ creating employment for rural women and
providing training in weaving
18 Tonibung (Sdn Bhd) Providing electricity to remote rural villages/ creating jobs/ technical training
19 Worming UP (Sdn Bhd) Urban environment management/ food waste management
20 WWF (Sdn Bhd) Environment management/ creating livelihood for remote communities
Social Enterprises in Malaysia: Market Types
• Social enterprises operate under market failure conditions, they potentially operates in nichemarket, which are deemed unattractive to for-profit businesses.
• Out of 20 sample social enterprises 11 operate on niche or exclusive market, offering uniqueproduct or experience. Only 5 are operating in mass or open market competing with for-profitbusinesses.
• Target markets include business-to-consumer (B2C), business to business (B2B), and business-to-government (B2G).
• Social enterprises have opportunities in accessing the business-to-government (B2G) marketsby virtue of operating in the social sector.
• B2B includes corporate social responsibility (CSR) projects, as all public-listed corporations inMalaysia are required to incorporate sustainability strategies in their corporate mission.
Social Enterprises in Malaysia: Market TypesNo Social
Enterprise
Niche
Market
Open
Competition
Beneficiary
Market
Only
B2C
B2C
&
B2G
B2B
&
B2C
B2B
&
B2G
B2B,
B2C,
& B2G
1 100% Projects
(Sdn Bhd)
2 ANB Agro
Trainer (Sdn
Bhd)
3 APE Malaysia (Sdn Bhd)
4 Arus Academy
(Sdn Bhd)
5 Backyard
Tours (Sdn
Bhd)
6 Batik Boutique
(Sdn Bhd)
7 BC Initiative
(Sdn Bhd)
8 Biji-Biji (Sdn
Bhd)
9 Rapidea (Sdn
Bhd)
10 Build for
Tomorrow
(Sdn Bhd)
11 DIBS Coffee
(Sdn Bhd)
12 Heart Treasures (Sdn
Bhd)
13 Leaderonomics
(Sdn Bhd)
14 Loo Urban
Farming
(Enterprise)
15 PACOS (Trust)
16 SAWO
(Society)
17 Tanoti (Sdn
Bhd)
18 Tonibung (Sdn
Bhd)
19 Worming UP
(Sdn Bhd)
20 WWF (Sdn
Bhd)
Social Enterprises in Malaysia: Sources of Finance
Social
Enterprise Sector
Seed Funding Grants
Reinv
estme
nt
In-kin
d
Contr
ibutio
n
Crow
dsou
rcing
Invest
ment
Loan
s
Dona
tion
MaG
IC
(Acc
elerat
or)
MyH
arapa
n
Busin
ess A
ngels
Perso
nal,
Paren
ts an
d
Frien
ds
Othe
rs
AirA
sia
Foun
datio
n
Britis
h Cou
ncil
MaG
IC
(Amp
lify)
Crad
le
Othe
rs
1 100%Projects Education ✓
2 ANB Agro
Trainer,
Agriculture ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
3 APE Malaysia Tourism ✓ ✓
4 Arus Academy Education ✓ ✓ ✓ ✓
5 Backyard Tours Tourism ✓ ✓ ✓
6 Batik Boutique Art & Craft ✓ ✓ ✓ ✓ ✓ ✓
7 BC Initiative Corporate ✓ ✓
8 Biji-Biji Art & Craft ✓ ✓ ✓
9 Build for
Tomorrow
Infrastructure
& Utilities ✓ ✓
10 DIBS Coffee F&B ✓ ✓
11 Heart Treasures Art & Craft ✓ ✓ ✓
12 Leaderonomics Corporate ✓ ✓ ✓
13 Loo Urban
Farming Agriculture ✓ ✓ ✓
14 PACOS Agriculture ✓
15 Rapidea Public
Relations
✓
16 SAWO Welfare ✓ ✓
17 Tonibung Infrastructure
& Utilities
✓ ✓ ✓
18 Tanoti Art & Craft ✓ ✓ ✓ ✓ ✓
19 WormingUP Waste
Management ✓ ✓ ✓ ✓
20 WWF N/A ✓ ✓
Sources of Finance• In the early stage, most founders of SES devoted only part time for running them, as they were working as
employees elsewhere (e.g. founders of Leaderonomics, Heart Treasures, Arus, Batik Boutique and Tanoti).
• Some SEs received seed funding through incubator and accelerator programmes under either MaGIC or MyHarapan. (e.g. 100% Projects, Arus Academy, ANB Agro Trainer, Heart Treasures, Backyard Tours, Loo Urban Farming and WormingUP).
• Only Arus and Batik Boutique received business angel investment.
• Most SEs received grants from sources such as AirAsia Foundation, British Council, MaGIC (Amplify Award), Cradle (venture capitalist) and corporate sponsorship such as the Alliance Bank Bizmart Challenge and Shell Malaysia.
• The Amplify Award recipients are: ANB, Arus, Batik Boutique, Biji-Biji, Heart Treasures, Tanoti and Tonibung.
• Loo Urban Farming was the only social enterprise that received a product development grant (RM150k) from a venture capitalist (Cradle).
• Only Batik Boutique managed to secure a loan from a private fund abroad. Their attempt to obtain a loan locally failed, as the founders are foreign nationals.
Sustainability Factors and Challenges
faced by the Social
Enterprises in Malaysia
Factors Contributing to Sustainability
• Two major factors that contribute towards sustainability of the social enterprises in Malaysia:
• (i) skills and past experience;
• (ii) marketing opportunities and external support.
Major Challenges faced by Social enterprises in Malaysia
• Marketing products and services
• Retaining beneficiaries,
• Negative perception and lack of public awareness,
• Lack of access to resources,
• Lack of product development
• Retaining trained volunteers.
Perceptions of the SE Ecosystem
• General perception is that the SE ecosystem is in emerging stage and needs extensivedevelopment starting from creating general awareness in the country.
• According to MaGIC although their programmes are helpful in creating such awareness,helping SEs to crystallize their social purposes, the single biggest constraint is financialviability.
• However, it is also felt that there is significant overlapping of operations of differentorganizations in the ecosystem, and as a result the number of intermediaries aredeclining (partly because of the dominance of MaGIC).
• Another problem highlighted is the weak link with the universities and lack ofawareness and lack of interest among universities towards fostering socialentrepreneurship.
Perceptions of Intermediaries
• It is felt that other ASEAN countries such as Thailand have far more advanced ecosystemcompared to Malaysia, and the universities are playing a major role.
• Slow participation of private sector in the SE ecosystem.
• Under development of the entire ecosystem across the spectrum due to problems offunding and especially long-term funding, lack of regulations, and the negative perceptionof NGOs that are trying to transform into profit making social enterprises.
• Lack of participation from the public, the number of SE intermediaries are declining.
• There is a need for increasing government procurement that will create a market for socialenterprises.
• There are high failure rate among startups, mainly due to inadequate competenciesamong the SE founders.
Perceptions of Social Enterprises
• Diverse backgrounds of SEs influence their perception of the issues, challenges and the outlook ofthe industry and they require different support from the institutions.
• The startups find the social networking, accelerator programme and seed funding provided by MaGICand other intermediaries, effective and helpful, but not so by the mature social enterprises and theNGO transitioning social enterprises, as they require different assistance, such as legalization andrecognition to enable them to grow their operations and access new markets.
• The foreign national social entrepreneurs feel that some form of legalization will help recognize theirsocial enterprises and ease visa applications and organizational ownership.
• Whereas, founders transitioning from NGOs or founders who were strongly affiliated with an NGO,are more conscious of the ethical aspects of their income sources than their operations and thesocial programmes implemented.
• All social enterprises interviewed strongly felt that the absence of legal status for socialenterprise has been the biggest obstacle for the growth of the sector.
• Legal recognition will lead to the formulation of specific policies and incentives by thegovernment targeting growth of the social enterprise sector.
• Interestingly, a number of NGOs are in transition towards social business model and theyfeel the current legal limbo is not helping this transition. It appears that the problem ofgenerating funding from donors and recruiting young talents are the main reason behindthis trend.
• Unlike BIs and IMs who argue that lack of funding is one of the major problems, most ofthe SEs do not put greater emphasis on the need for government funding. Instead, theyargue that legal status for social enterprise will help create access to significant privatesector funding, which will help growth of the SE sector.
Conclusions
• Social entrepreneurship in Malaysia is still in emerging stage and bulk of SEs still lacks legal recognition, whichhas created a disadvantage that led to negative perception of their credibility.
• Most social enterprises were started informally, as personal initiatives, eventually they have evolved intoformal organisation.
• The sectors where the SEs operate include education, poverty, rural development, environmentalsustainability, eco-tourism, socio-economic development of marginalized groups and youth at-risk.
• They make significant contribution to creating employment for particularly women and thereby increasinghousehold income and reducing poverty.
• Most social enterprises in Malaysia operate as hybrid organisations, which enable them to operate in niche ormass markets, supporting their developmental needs and sustaining their social value creation.
• The BIs and IMs operating in the social enterprise sector in Malaysia are a mix of public (fully or partiallygovernment funded) and private funded actors. The main agency promoting SE sector, MaGIC, is fully fundedby the government.
• Some of the intermediaries (e.g. Tandemic, PACOS Trust and MyHarapan) themselves function like socialenterprises. They generate revenue through their programmes and training activities such as CSR fundedprojects for corporations and reinvest some of that into incubating social enterprises.
Conclusions
• Malaysian social enterprises face different challenges and sustainableneeds, depending on the markets they serve and sectors they operate,and the professional backgrounds of their founders.
• The factors vital to the survival of social enterprises are social capital andaccess to funding.
• The matured SEs and the NGOs that are trying to become SEs feel that theintermediaries need to come up with innovative services and supportprogrammes for them, while they are trying to develop new socialenterprises.
• SE sector is not well linked to the regional or national innovation systemdue to lack of clear understandings of what are the social enterprises’needs and weak linkages between major stakeholders (e.g. lack ofparticipation by universities).
Policy Recommendations
• The government needs to introduce relatively less complex process to accord legal status to social enterprises inthe country in order to develop the SE ecosystem rapidly and facilitate greater participation of both public andprivate sectors.
• BIs and IMs need to come up with more innovative services and support programmes for matured SEs and theNGOs that are trying to become social enterprises.
• BIs and IMs should focus on studying the needs on the ground through innovative multi-stakeholdersengagement. The lead actor in the sector MaGIC needs to take the initiative to bring about multi stakeholdersengagement and generate more innovative ideas in partnership with other IMs so that the outcomes can bemore effective.
• Links with universities and their role in strengthening the SE ecosystem need to be stronger. For this,universities should play a proactive role in incorporating social entrepreneurship in their teaching programmesand entrepreneurship courses and training. Also, IMs should seek active partnership with universities to fosterSEs. MaGIC should play a greater role in this than what it is currently doing.
Policy Recommendations
• To build a robust and efficient SE ecosystem in the country, there is a need to map the SE sector in thecountry through a national survey of various stakeholders including the social enterprises.
• As different markets and beneficiaries of social enterprises pose different challenges, social enterprises andintermediaries need to find different solutions and approaches to overcome them.
• Policy makers need to focus on the development of intermediaries and policies favouring stakeholderparticipation in social entrepreneurship across all sectors by providing non-financial and financialincentives such as tax exemptions.
• As social entrepreneurship has the potential for reducing poverty and inequality especially between therural and urban communities, sustainable development goals or inclusive growth objectives should beembedded in the social entrepreneurship ecosystem framework.
Thank You!!!
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